Our website uses cookies to improve your user experience. If you continue browsing, we assume that you consent to our use of cookies. More information can be found in our Cookies Policy and Privacy Policy.

Fidelity is right to protect renewals from the rebaters

To adapt a slogan from President Clinton&#39s election campaign: “It&#39s the distribution, stupid.”

It is clear that IFAs and product providers and, on a good day, the FSA understand this. The Government does not. But that&#39s another story.

Fidelity is certainly concerned, as revealed by its action to deny access to brokers which rebate renewal commission.

The question is how much should providers seek to influence distribution. Fidelity has joined Threadneedle in acting to prevent IFAs from being undercut by other brokers. Threadneedle guaranteed one commission rate to all IFAs. Fidelity&#39s move is more specifically targeted.

Its rationale is that rebating renewal comm ission could force other IFAs to do the same or put them out of business. It must be concerned the practice operated by a limited number of intermediaries is set to spread.

Advice is worth the money and should be extended, not restricted. The 0.5 per cent renewal seems a fair amount if IFAs&#39 advice is ongoing. Renewals also stimulate a competitive market for follow-up advice if the original IFA neglects its clients.

On the life and pension side, we have seen problems with “advice black holes”, such as Abbey Life, where renewal has not been paid.

But where it gets interesting is over Fidelity&#39s claim that renewal is for an adviser and so cannot go to the client.

Despite misgivings about providers trying to control how intermediaries use their remuneration, in these limited circumstances, we support Fidelity&#39s position and think IFAs should too.

Recommended

Scottish Widows is offering a stakeholder pension which gives policyholders access to external funds and pays standard Lautro commission levels. The company says its plan meets the Govern ment&#39s standards as well as offering access to a range of 17 investment funds managed by Widows and funds from Merrill Lynch, Schroders and Newton. Widows says […]

Over £35m was invested in venture capital trusts in the last week in November 2000, showing the fastest rate of investment since the start of VCTs in 1995, according to a report from Allenbridge Performance Analysts. Allenbridge believes the rise is a result of a shift in the VCT market away from income tax to […]

The Consumers&#39 Association and the Council of Mortgage Lenders have expressed serious concerns over the FSA&#39s decision not to regulate mortgage advice. Their criticism comes in response to the FSA&#39s consultation on mortgage regulation, which ends this week. The failure to include mortgage advice under the regulatory umbrella forms the biggest objection within their responses […]

Haden Welbeck & Asso ciates principal Andrew Hummersone is so concerned that stakeholder will be a “make or break” product for IFAs that he has sent his business acc ounts and an open letter to pensions minister Jeff Rooker. Hummersone wants Rooker to scrap the 1 per cent annual management charge and ease the compliance […]

Martin Foden, head of credit research at Royal London Asset Management, explores the role of secured bonds, considering the impact of default and the characteristics of secured bonds versus supranationals and highlighting some examples. He also examines the evolution of the credit market and rating agency inefficiencies. Read the article in full: The value of […]

Newsletter

Latest from Money Marketing

You have to do hard things to be successful in life. The things no one else does. Why? Life coaches will tell you those are the things that define you; the things that make the difference between existing and living. This may well be true but if that does not float your boat, then American […]

Only a quarter of women are shopping around for their retirement income, according to national IFA LEBC. Customers of LEBC pension advice business The Retirement Adviser are far more likely to use its whole of market service to find the best retirement income solution if they are male. LEBC says the proportion of women using […]

A weekly account of the curious goings-on in the world of financial services A game of Brexit MonopolyLast week, in a foreign policy speech, Theresa May said Brexit negotiations were in their “endgame”. WSJ thinks this is highly unlikely, having heard that not even a quarter of European law has been rolled over yet. Wingate […]

19th November 20182:58 pm

Comments

Leave a comment

Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.